The Australian Commonwealth Treasury has released exposure draft legislation which proposes that certain foreign
pension funds will be able to access the Managed Investment Trust (MIT) withholding regime and the associated lower rate of withholding tax (WHT) on their Australian
investments.

As
presently drafted, the regime has been limited to entities established by or
for foreign governments and their agencies. A foreign pension fund (as a
foreign beneficiary or foreign custodian of a trust) may not access the MIT
withholding regime in certain circumstances, meaning that the fund may be
liable to tax under the general ‘trust’ provisions and may be taxed at the
highest marginal tax rate.

The amendments are proposed to
retrospectively apply to income years commencing on or after July 1, 2008. The
Australian Commonwealth Treasury is currently consulting with industry and key
stakeholders on this draft legislation.

PwC observation:

The
retrospective nature of these amendments is to ensure that affected foreign
pension funds can access the MIT withholding regime as originally intended. PwC
expects that the limitation on the scope of the amendments will be
at the centre of submissions and consultation with the government.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.